Microeconomics - Price Controls and Market Efficiency

These flashcards cover key terms and concepts related to price controls and market efficiency in microeconomics, as discussed in the lecture notes.

Price Ceiling

A maximum price set by the government that can be charged for a good or service.

Price Floor

A minimum permissible price set by the government for a good or service.

Disequilibrium Prices

Prices that occur when the quantity supplied does not equal the quantity demanded.

Binding Price Floor

A price floor that is set above the equilibrium price, leading to surplus supply.

Minimum Wage

An example of a price floor in the labor market that aims to guarantee a minimum income for workers.

Excess Supply

The situation when the supply of a good exceeds the demand for that good, often due to price floors.

Economic Surplus

The difference between what consumers are willing to pay for a good and what producers actually receive.

Hidden Market

A market that arises when products are sold at prices that violate legal price controls.

Rent Controls

A form of price ceiling specifically applied to rental housing, aimed to keep housing affordable.

Deadweight Loss

The reduction in economic efficiency that occurs when the equilibrium outcome is not achievable or not being achieved.

Market Efficiency

A condition where all potential gains from trade have been realized and the market operates without waste.

Output Quota

A regulation that sets a minimum quantity that must be produced or a maximum quantity that can be produced in a market.

Public Virtue

The idea that morality or ethical considerations should influence market practices, especially in times of crisis.

Short-run Effects

The immediate impacts observed after the implementation of a policy or regulation.

Long-run Effects

The more gradual and eventual impacts that develop over a longer period following an economic policy.